Soundings

Daniel J. Flynn

Taxachusetts No More?

The Bay State considers the unthinkablerepealing its income tax.

Autumn 2008

For one weekend this summer, Massachusetts enjoyed a sales-tax holiday. Instead of driving across the border to sales-tax-free New Hampshire, residents could shop at home without paying sales tax, if only temporarily. But the sales-tax holiday was just a precursor to what could be a much more hopeful development: the potential repeal of the states income tax this November.

Thanks to the tenacity of Carla Howell of the Committee for Small Government, voters may be able to eliminate Massachusettss income levy through Question 1 of a ballot referendum. In 2002, a similar ballot question asking for the repeal of the income tax earned 45 percent support. Today, with jobs and residents fleeing the economically limping Bay State, the political climate for eliminating the income tax is even more hospitable. Backers also hope that the repeal would force Massachusetts to practice tough fiscal disciplinethe income tax constitutes more than 40 percent of state revenue.

The history of taxation in Massachusetts over the last century is one of legislators forever indulging the states appetite and never prescribing a diet. The states first income tax, enacted in 1915, was initially presented as a substitute, complete or partial, for the existing tax on personal property, observed the Harvard economist Charles Bullock. But the income tax neither eliminated nor alleviated the property-tax burden, and it soon became a permanent levy, with the rate rising from 1.5 percent in 1950 to 5.3 percent today. During the mid-sixties, something similar happened when Republican governor John Volpein the strange world of Massachusetts politics, party labels confuse as much as instructcrusaded for a sales tax while mainly Democrat antagonists in the state legislature battled against it. The sales-tax foes won the first six battles, but in winning the seventh vote, Volpe proved the old maxim that if at first you dont succeed, try, try, try, try, try, try again. The sales tax was to last from April 1, 1966, to December 31, 1967, but over 40 years later, a mere two-day respite from it is cause for celebration.

Massachusetts didnt stop there in its quest for revenue. Only five years after imposing the sales tax, the state turned to a lottery, as it had in colonial times. Four years after that, in 1975, despite a lead pipe guarantee that he wouldnt raise taxes, Governor Michael Dukakisforeshadowing the famous broken pledge of his 1988 presidential-election opponentsubstantially increased duties on gasoline, cigarettes, restaurant meals, and alcohol. Early in 2008, the state legislature passed a $10 tax increase on cigarette cartons, making the price disparity for smokes about $15 per carton between Massachusetts and New Hampshire. And now Governor Deval Patrick is pushing for gambling casinos, among other things, to fatten state coffers.

Massachusettss revenue hunger results from massive government spending. State takeover of the Boston Elevated Railroad in 1947, the dramatic postwar expansion of taxpayer-supported higher education (despite Massachusettss unrivaled array of private colleges and universities), and RomneyCares recent promise of universal medical coverage have all worked to bust budgets.

Further, Bay Staters dont have to look far to find examples of poor stewardship of their tax dollars. The Boston Globe reported in July that a city firefighter out on disability was busily training for a national bodybuilding contest, in which he finished eighth; the Boston Herald discovered in August that 501 state employees had 24-7 use of government vehicles, with gas tanks filled at taxpayer expense. And after videotapes emerged of county official John Buonomo allegedly stealing from courthouse copy and change machines, Herald columnist Howie Carr quipped that Carla Howell ought to run 30-second spots of the surveillance video of Buonomo caught in the act, with a voiceover: This is your state government at work. What this elected official is doing to these copying machines, his brother pols are doing to you every day of the year. Picking your pocket. Robbing you blind.

Though a recent National Tax Foundation study showed Massachusetts in the middle of the pack with regard to tax burden, the Boston Globe accurately laments that the epithet Taxachusetts has been difficult to shake. If Question 1 prevails in November, though, perhaps the nicknamelike the income taxcan be retired permanently.